What is Superannuation Fund Benefit in India and How to calculate it?
When we think of retirement benefits, Employees Provident Fund (EPF) Public Provident Fund (PPF), Gratuity and National Pension Scheme (NPS) are the few things that strike our mind. Very few people know that there is another benefit plan existing known as the superannuation benefit. In order to plan your retirement in a better way, it is very important to know your superannuation benefits. It is an organizational pension program created by a company for the benefit of its employees. In other words, it is referred to as a company pension plan. What is Superannuation Fund Benefit all about? Who is eligible to get Super Annuation Benefit? How does Superannuation scheme work exactly? How Superannuation Calculation is done in 2020? What are various income tax benefits available in Superannuation scheme in 2020?
Also Read: Best Largecap Mutual Funds to invest in India
What is Superannuation in India?
Today, most companies offer a superannuation scheme, but many of might have less knowledge about superannuation act in India. Superannuation fund meaning in simple terms is a kind of retirement benefit that is offered to you by your employer. Your employer makes a contribution every year on your behalf towards the group superannuation policy held by the employer. Usually, the companies take Superannuation Plans from any of the approved insurance companies like LIC or ICICI approved insurance companies and contributes therein. The returns of the superannuation fund may differ according to the company providing the annuation insurance.
The employees who have been contributing to the superannuation scheme of their company during their employment; at the time of retirement or resignation have the option of buying a superannuation-linked pension from any insurance company.
What are various types of Superannuation Benefit?
There are two types of super-annuation benefits:
1) Defined benefit plans
The benefits to be received at the retirement are already known to the employee and it is fixed on the basis of their rank service and final salary. So, the risk of generating such benefits is entirely on the employer.
2) Defined contribution plans
These schemes are better to manage as the employee and employer directly correlate it with the contributions made. The scheme defines the contribution of both and leaves the outcome to the market forces. Most of the plans existing today are defined contribution plans. Here, the risk factor is attached to the employee, as he is not aware of the amount he is going to receive at the time of retirement.
How does Superannuation scheme work exactly?
The companies open the superannuation benefit fund with any of the approved agencies like ICICI, LIC etc. Employer needs to contribute to maximum of 15% of the salary to superannuation funds on behalf of the employee. The companies are making this part of the salary structure itself i.e. part of CTC. There is no specific contribution from employees like it is for EPF. Upon retirement or resignation from his job, his employer to either withdraw his entire superannuation fund or choose the annuity option and gives the employee.
How is Superannuation Benefit calculated?
The superannuation calculation on the basis of following points.
1) Less than 1 year of service – NIL.
2) 1 to 2 years of service – 50% of contribution + interest received from fund.
3) 2 to 3 years of service – 75% of contribution + interest received from fund.
4) 3+ years of service-100% of contribution + interest received from fund.
The above table reveals that if the employee wants to benefit himself from the superannuation fund, he needs to be associated with the company for more than 3 years. Then only, the employer would contribute to 100% of the amount allocated for superannuation. If he works for less than 3 years, he would not be benefited though it is a part of CTC structure.
Though it looks superannuation calculation is confusing, if you can understand the basics, it would be easier.
What happens to Superannuation scheme if employee resign from a company?
If an employee resigns from a company and moves to another company, he can transfer his superannuation fund to the new company if the new company is having approved superannuation fund. Superannuation withdrawal on resignation in India can happen only in case, new company does not provide this facility. In such case employee can withdraw the amount with necessary taxes applicable or retain the amount in the fund till the retirement.
What are various income tax benefits available in Superannuation scheme?
For the purpose of taxation, there are two types of superannuation. One is approved and the other is not approved. This approval is taken from the IT Department. The approved fund means that the fund has been approved by the Commissioner in accordance with the set rules. The employee needs to ask his/her employer about the category of the fund.
From the employee’s point of view, here are the tax benefits:
1) Employee contribution (possible in the case of defined contribution and not defined benefit) for an approved superannuation fund is eligible for deduction u/s 80C, subject to the limit set in Section 80CCE.
2) Benefits payable on death or injury are tax-exempted.
3) Pension or annuity will be treated as salary income and taxed accordingly.
4) At the time of change of job, any amount withdrawn is taxable under the head ‘income form other sources’.
5) Interest from a superannuation fund is tax-free.
6) On retirement, 1/3 of the commuted fund is fully exempt from tax and the remaining amount if transferred to an annuity is tax-free and if the amount is withdrawn, it is taxable in the hands of the employee.
From the employer’s point of view
1) The contribution of employer to the fund is allowed as expenditure deduction for business u/s 36(1)(iv) subject to certain limits of the Income Tax Act 1962.
2) Income received by the trustees on behalf of an approved superannuation fund is exempt u/s 10(25)(III).
What happens to your Superannuation scheme when you reach retirement age?
Once the retirement age is attained, the employee has two options-
Option 1 – To withdraw 1/3 of the accumulated fund and the remaining 2/3 be converted into the pension.
Option 2 – To buy the pension product for the entire amount without withdrawing anything. Such commutation is tax-free for an employee.
For instance – X retires with a superannuation fund of Rs 15 lakh. Then, he may withdraw Rs. 5 lakh from it (1/3 of Rs. 15 lakh). It is totally tax-exempt. The remaining Rs. 10 lakh is fully taxable if he withdraws and if he buys annuity from this amount, it is tax-exempt. He can use the entire amount of Rs. 15 lakh for buying annuities.
Also Read: How to check if you are eligible for Gratuity from your company?
What are various annuity options available in Superannuation?
At the time of retirement, post-retirement annuities can be bought from any life insurance Company. The most common options available to the employee are –
- Payable for life
- Payable for life guaranteed for 5 years or 10 years or 15 years
- Payable for life with a return of capital
- Payable jointly on the life of husband and wife
Conclusion: Superannuation scheme is an excellent for the working class of India to make their retirement more financially stable. The employees are much more secured with these schemes. Another benefit from such schemes is that the employee is prompted to be associated with an organization for a longer term as such schemes provide more benefits to them rather than switching jobs more frequently.
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What are the annual return for superannuation contribution..
Superannuation funds are offered generally by insurance companies that can provide 5% to 6% yearly returns though not guaranteed
Is it possible to withdraw the whole amount of superannuation fund at the time of resigning from the company? if yes, how?
Pls see the T&C as it is not simple Yes or No.
For Superannuation fund Entire amount shall i withdraw at the time of Retirement
Hi Suresh,
I have 16.7 lacs in my SAF and since I have left the job and my current employer does not have a SAF, i need to apply for the claim. I wanted your guidance on the pension amount that I can expect if I opt for the following :
1. I don’t want to take the 1/3rd claim and wish to use the entire corpus of 16.7 for annuity.
2. If I opt for joint pension option (15 years) with NO return of capital, what will be the pension amount?
3. If i opt for return of capital but opt for joint pension option (15 years), how will the pension amount change.
4. When we specify 15 years, will the pension stop after 15 years?
Thanks
Ruby
Hello Ruby
The pension amount depends on the insurance company and the option which you choose with them. It would range between 6% to 8% of the total amount. If the SAF is Rs 16.7 Lakhs and you do not want to claim 1/3rd, the annual pension could be between Rs 1 lakh to Rs 1.3 lakhs. The amount depends on single option, join option, return of premium option etc. For exact number, you can visit any of the LIC or other private insurance portals and check for pension amount based on respective options.
I have been working in a private organization in India for the last 6 years and 6 months. and now I got an employment offer abroad so I will leave this Indian organization next month. now my basic salary is 25298 per month from this 2530 (10%) is sent to superannuation. I want to know how much lump sum can I withdraw from this superannuation account?
Vivek, Pls approach your Payroll / HR department as no one can tell you how much money is accumulated and whether the entire amount can be withdrawn if it falls below the threshold limit.
Dear Suresh,
My current employer provides Superannuation benefit (with LIC) and has given the choice to continue/discontinue. I have joined recently to this organization in last 7 months and the fund available is very minimal- The annual amount is 80K. Please advise if i should continue with SA or opt out of it?
From last FY i started NPS at 50K per year. if i opt out, the component is taxable and could be invested in NPS.. Is that also an option
Vineeth, If I am in your place, I would not opt superannuation. Reason is your investment is held till your retirement. Even post that you can withdraw partial amount and balance take annuity pension scheme. NPS is no different from SA except that you can withdraw based on T&C.
In option i, ii and iii. How much pension one can get.
If worked for required period, accumulation is 30 lacs, he can withdraw 10 lacs interest free(1/3). Rest 2/3 20 lacs will go for annuity.
How much he can get pension in option I and what pension amount in option iii and annuity amount to his family.approximate calculation
Abhay, This would depend on where your superannuation fund is. As an example, if your superannuation is with LIC, you need to take pension plan from LIC only. Pension depends whether you opt for pension for only individual, pension for individual and spouse etc., LIC (for self) pays approx 6% to 6.5% as pension on the invested value. In your case Rs 20 Lakhs x 6% or 6.5% = 1.2 Lakhs to Rs 1.3 Lakhs. Please verify with respective insurance agency and reconfirm these nos as these would change any time
I have a corpus in SAF which is maintained by LIC through my employer(private). I resigned last month. What are my best option from the below (or) any guidance/suggestion from your end will also help. Consider age is below 45
1) commute 1/3 + pension option as annuity option for life -> Need to know, how pension is calculated and it would be more than below option?
2) without commutation + pension option as annuity option for life -> Need to know, how pension is calculated and it would be more than above option?
3) Is it possible to move ALL THE CORPUS to NPS ? or is there is any restriction on moving the amount?
4) As of now I do not have any NPS account, hope bank can support on it, any suggestion from your end?
Hello Anand, If your new employer do not have SAF or you are not working any more in future (in any company), you consider these options
1) Pension amount would be approx 5% to 6% of the balance left out. e.g. If you have Rs 10 Lakhs in SAF, 1/3rd you can withdraw and balance Rs 6.67 Lakhs, you can expect 5% to 6% as pension per annum. i.e. 33,333 to Rs 39,999. The pension amount can reduce if you take pension with joint life or pension with return on premium etc.,
2) Like I said it would be 5% to 6% i.e. As an example 10 Lacs x 5% or 6% = Rs 50,000 to Rs 60,000 per annum.
3) You can move entire amount to NPS without restriction (I did it for myself in 2020). Reach out to your employer and they can provide you relevant forms to transfer this to your NPS
4) You can simply open eNPS on NSDL website or you can go through any bank too.
Hi Suresh
Please let me know the procedure to transfer superannuation fund from LIC to NPS
Sneha, 1) First check with your payroll team about this transfer. It can happen only if your new employer does not have NPS and old employer superannuation needs to be transferred 2) If they confirm that you can do it, open NPS (its online you can do it in few days) 3) Share NPS details to your old employer for transfer. You need to fill transfer document which your payroll / HR can provide 4) It would take 2-3 weeks for transfer of these funds. The above steps is based on my personal experience which I did it in 2020.
Thanks Suresh. This helps. I am no more working and decided to transfer SAF to NPS. I have already NPS account and will check with the old Employer for the transfer option.
Thanks again- Sneha
Great
Hi
I am currently an expat employee of an Indian MNC. I am going to switch jobs to a different employer in USA.
My question is what will happen to the funds accumulated under PF and Superannuation? What options do I have to withdraw these amounts.
Your help is much appreciated
Superannuation – You can move them to NPS Tier-1 or withdraw eligible amount (1/3rd) and balance take a annuity plan
EPF – If there are no contribution for more than 2 months, you can withdraw 100%
Hi Suresh,
I have recently changed my job. My old company had superannuation facility and my new company does not have that facility.
I have 2 queries please –
1. I have received the my superannuation statement from my old company, it does not show the bifurcation of my employer’s contribution towards my superannuation. So how can I see my employer’s contribution to my superannuation? or is it even mandatory for employer to contribute towards employee’s superannuation(just like EPF)?
2. I want my superannuation to be transferred to my EPF or NPS. And as per my knowledge, it is allowed by Govt. Of India. However, my old employer mentioned that facility to transfer to EPF or NPS is not allowed in their company. So, my query is – can they disallow the facility to transfer superannuation to NPS or EPF when Govt. of India has allowed the same?
Appreciate your suggestion. Thank You in advance!
Hello Dhaval, There is nothing like employer or employee contribution in superannuation. There would be only one deposit which is anyways deducted from your CTC.
You cannot transfer superannuation to EPF. However you can do it to NPS. I did it personally last year to my NPS account, hence I am 100% sure about it unless the superannuation fund is maintained by any private trust by your previous employer. Just with them how you can get your money if it is private trust maintained superannuation.
Hi Suresh,
Thank You for your reply!
My previous organization had superannuation with DKMOnline. I am not sure whether it is private trust or govt trust.
Also, my previous organization gave me below 2 options only, and I am not sure whether there can be any 3rd option for withdrawing my money. Please suggest on the same:
1. Service Equal to or More Than 5years
you have an option of withdrawing 1/3 proportion, which is subjected to tax and remaining 2/3 proportion as Annuity i.e pension depending upon the mode of annuity you select (monthly/quarterly/half yearly/yearly).
OR
you can opt for 100% annuity which is paid on monthly/quarterly/half yearly/yearly depending upon the mode of annuity you select.
2. Service Less than 5years
you have an option of withdrawing 50% proportion, which is subjected to tax and remaining 50% proportion as Annuity i.e pension, depending upon the mode of annuity you select (monthly/quarterly/half yearly/yearly).
OR
you can opt for 100% annuity which is paid on monthly/quarterly/half yearly/yearly depending upon the mode of annuity you select.
Regards,
Dhaval
Looks its private trust where nothing much can done from your side. Pls opt for 1/3rd withdrawal and balance take annuity option. If they provide various options in annuity, opt for annuity with joint life (you would get pension amount and in your absence, your spouse would get pension life long)
What applies to the employees fund upon death, where is no nominee or beneficiary
Funds goes into dormant account till the time legal heirs claim the money.
Hi Suresh,
Recently I switched my job and in my previous company I’d superannuation as part of the CTC. I’m able to see the balance from http://www.LICindia.com, I plan to withdraw the amount during my retirement age (10+ years from now). How is the interest calculated on the accumulated corpus account? Is there any chance of my account getting de-activated after few month if there is no transaction?
Hello Raj, Superannuation would continue till maturity (retirement age). The returns would be minimal from any insurance company. If your new company do not have superannuation, I would recommend you shift these funds to NPS Tier-1. This way you can select appropriate scheme preference and earn high returns (6% to 14% depending on the equity component) compared to regular superannuation funds where the returns are inline with any insurance company saving scheme (4% to 5.5%)
Hello Suresh,
I have NPS account in KFINTECH & Superannuation in Private firm through Lic India,
Can I transfer the amount to NPS..and How?
Plase guide
NPS is always a corporate scheme and it would not be with a company. You might have a corporate NPS scheme (your personal NPS scheme linked to Kfintech) and you might be contributing every month directly through payroll deduction. If you have superannuation with LIC of India and your current employer cannot provide superannuation, you can always transfer superannuation to your corp NPS / personal NPS. If your current employer can provide superannuation benefit, this amount can straight away gets transferred to SA of new employer i.e. kfintech in your case
D/sureshji,
Kindly note that I have retired on 31 st jan22 at the age of 58 yrs asper the noms of my company after serving 11 yrs +.
I can’t calculate approx value of my superannuation .can u help me in that regards.
You cannot calculate on your own. This depends on the salary structured defined by company year on year. You need to approach your payroll / HR department for the break-up and further steps on how you would withdraw it.
Hello Suresh,
I resigned from my previous employer after serving for 13 yrs 4 months of service. when asked about superannuation claim, the HR dept said that they have a corporate HR policy of not paying if one has not completed 15 yrs of continued service or completed 48 yrs of age. Is there any rule by the governing body regarding this?
Advise me of withdrawal of complete contribution
or
Transfer of this account to present employer.
There are no specific governing rules. This is paid at the discretion of the company based on the company policy. Check what is indicated in your offer document. If it states that, you cannot do anything. If not, you can always question them.
We cannot withdraw 100% of SA. You can withdraw partially (based on your eligibility) and balance, need to take annuity plan. Instead, you can transfer to present employer (if they offer such facility), else move it to NPS Tier-1 account. This way it would be in your control and you can track it closely.
Dear Suresh,
My current employer contributes to both superannuation fund and to my tier-1 NPS account.
I am in the process of resigning from my current employer. My new employer has NPS plan but they don’t have an approved superannuation fund.
In this case, can I ask my existing employer to transfer my superannuation balance into my tier-1 NPS account? I don’t need this money at the time of separation from current company (since it’ll also be taxable) and also the annuity options don’t seem that lucrative.
Kindly provide your valuable inputs. Thanks in advance.
~Vithal.
Since you do not need money till retirement, you can opt for transferring Superannuation fund to NPS Tier-1. 1) Open NPS Tier-1 account 2) Provide these details to your employer who would be able to transfer to NPS Tier-1 only after your exit
Great article. Not many article out there on this topic.
When joining my new company, I have option, whether to ‘opt in’ or ‘opt out’ of superannuation scheme. It is part of CTC.
I already have NPS account, which is better in tax saving over and above 80C, exposure to equity and the account is in our control.
After reading all the comments, I am going to take an informed decision of opting out of this scheme. Thank you.
Good decision Yuvaraj
Dear Suresh,
I have resigned from my company on 27th Sept 2021, My Date of Joining is 1st April 2002 , Noticed period period was 2 months , & company has accepted to release me with in 30 days, Will I get gratuity for 20 years or 19 & 1/2 years?
It would be only for the completed period of service. In your case, it would be 19.5 years. You can check with payroll one more time as it also depends on last working day + how they compute SA for resigned associates.
Dear Sir,
I shall retire on 31.12.2021. My SA accumulation is 20 L. 1/3 rd amount 6.67 L will be in my hand. Please advise for 2/3rd amount. What should be the approximate pension amount if I opt for (1) Payable for life or (2) Payable for Life for 15Yr (3) Payable for life with return of capital.
SK Banerjee, difficult to say. You can contact the insurance company where your superannuation fund is deposited and they can give you various options along with approx pension income.
I have resigned a MNC private company and my new employer does’nt have a SA scheme. I was employed in India with the employer for 9 years duration and my accumulated corpus is 2.2lakhs total.
I need to know if below options are possible?
A. 100%withdrawal or
B. Transfer 100%to NPS account, what steps I need to follow or should ask the employer so that accordingly I can put up a request to previous employer for option A or B and what are the pros and cons with these options.
1) 100% withdrawal not possible
2) Transfer 100% to NPS – Possible. You need to approach your employer or PoP (where you opened NPS) to transfer this to NPS Tier-1. If you transfer to NPS Tier-1, it is in your control. You can monitor the performance and when you attain retirement age, you can withdraw eligible amount / take pension amount online without any intervention from previous employers.
Thanks Suresh Sir.
Article for SA and reply was very informative
Is this transfer rule to NPS valid for SA fund in employers group SA with LIC managed under employers trust?
This applies for any registered SA. Pls reach out to the payroll / employer SPOC on this
Hello Suresh Sir,
I have just joined a company where SAF is provided. I am not very sure whether to opt for it or not. though i have already registered for it. But thinking to deregister and it and opt for PPF instead. Could u please suggest and what could be other better options to invest.
Sonal, I am not sure whether you have a choice to say NO if corporates are offering this to employees. There is no tax on the amount contributed to SAF as it is directly credited to your SAF account. If there is an option for corporate NPS, you should opt it over SAF. Beyond this there is no other benefit. Regd PPF it is your personal investment and company would not contribute. PPF is good option, however interest rates are fluctuating. Consider these aspects before saying either YES or NO
Thanks sir..
Yes I can say no to SA even now.. what I thought is since SA does not provide anyy life cover also . And LIC schemes now offer great returns and with life cover also .. so will it be fine if I choose other LIC scheme over SA..
NPS is something I am not known to .. above all what to choose LIC/SA/PPF..
If the options is provided among these 3 to me, I would personally go to PPF
Got it. Thanku so much for ur valuable suggestion..
And I really appreciate the blog you are carrying forward. This is indeed a much needed information that every individual needs
Thank you Sonal. Would email you shortly to get feedback to improve our services (if any).
Dear Sir,
Right now my employer is deducting 15% superannuation contribution from my CTC. I want to know if this deducted amount is exempted from taxable salary?
Will I gain if I want to reduce the contribution to say 5%?
Sir,
I am working in TCS and now my age is 44 years. As of now i have accumulated around 7.9 lakhs in Super annuation fund. Also, i have the option of moving this superannuation to NPS internally in the organization. I need a better understanding why you say NPS is better than SAF. Need more clarity with respect to benefits in NPS rather having money in SAF.
Yagnesh, You can continue to have SAF if company is contributing to your fund every year. The question was what happens if company stops SAF or if you are moving to new company where there is no SAF. Can an employee continue. In such case tracking is difficult. Many readers on this blog indicated that they are not able trace their SAF and previous company is not able to help. There are cases where previous company was acquired by new company and the new company is not aware about SAF at all. In such case, instead of leaving it till retirement age and breaking head on how to get this money, one can move them to NPS which would be within the control of the individual. Whenever they want they can go for pension plan.
Many thanks for your valuable suggestions, I will continue with SAF in my organization.
Suresh, I have few questions on VPF, I am not sure I can put my questions on the same blog.
Thanks Yagnesh. For VPF, check our articles and if you have any additional queries, you can put them on relevant article
Dear Suresh
Greetings
My Company has SAF with LIC. I have resigned at 57yrs and 2 months at FEB end. I am looking for below two options;-
I want to know the pension that I will receive if I take 1/3 rd commutation
And the pension I will receive if I dont take any commutation?
I am taking the opinion : Life pension ceasing at death only. no return of capital to beneficiary.
Hope I am clear
Regards
Elias Alfonso
Hello Elias, The pension value would differ company to company, age and options. You can approach LIC (where your SAF is held) and they can provide you pension options and pension value.
Hi,
for sum of 10Lakhs, how much amount of pension can be expected approximately?
regards
Hi Atul, This would depend on several factors about whether you want to get simple pension till life long or whether premium paid needs to be paid back etc., In simple pension plan, one can get pension income between 6% to 7% of the premium paid. in this case of Rs 10 Lakhs, one can get between Rs 60,000 to Rs 70,000 pension income per annum for life long
I am a pensioner of an approved superannuation fund named ITC Pension Fund, Kolkata. I commuted 1/3rd of my full Pension and am receiving 2/3rd of my full Pension as my monthly pension through LIC since May 1999. 1/3rd of my full Pension ,reduced from my pension, is used towards recovery of lumpsum amount paid to me at my retirement in May 1999. Till March 2021, three times the lumpsum amount paid to me has been recovered in these 22 years. My question is that when all such recoveries of Commutation amounts are stopped after 15 years from retirement in all cases of EPFO pensions and some cases of NPS 95 pensions, why the same benefit of Restoration of commuted portion of pensions after 15 years has not been extended to these ASF pensioners?
Sir I want to know about how SAF pension calculate. If total saf accumulation is 2 lakh . How get monthly pension?
This would depend when you want pension and various options under it. It also depends on your insurance company where your superannuation fund is. e.g. if your SAF is in LIC, pls approach them and then can provide the checklist based on which you would know the monthly pension amount
Dear Sir
I have been working in the current comp. since eight years. In my previous company (before 2014) I was entitled for Superannuation I worked there 10 years, I merged my SA with current company’s SA. My current SA value is approx. 200000 (excluding old one). If I leave this company and convert my all the SA amount as a pension (immediately). Can I do it? My SA is with LIC.
Regards
Ajay
If you leave your current company, there are three options for you
1) Take immediate pension i.e. you would get pension from subsequent month. If you are in young age / middle age, you don’t need money now, hence opting immediate pension might not be useful
2) You leave it as is and continue with new company. This step is high risk, as tracking with your current employer would be painful
3) Move this SA to NPS. This is another good option where NPS would be in your control. However moving SA to NPS is little painful process where you need to approach your current NPS POC and make the entire process run. This is tedious process, but if you can make it happen, such funds can be useful for your retirement.
Hai sir
I have been paying 15% of my basics to superannuation funds. I would like to know that is there any process for tracking the balance and interest rate. And if I want to withdraw the amount can I get the full amount suddenly or I have to wait until my retirement. Pls guide i have accumulated around one lakh.
Thank you
Tracking – Get superannuation fund policy number + Insurance company and get the login details from them and you can view your balance online every day
Withdrawal – You cannot withdraw full amount. You can do partial withdrawals based on t&C. Pls read this article for more info https://myinvestmentideas.com/2020/10/how-to-withdraw-superannuation-fund-in-india/
I have worked 26 years in big construction company in India. But company has withdrawn SAF scheme in 2012. Thereafter they issued SAF statement in my name every year with interest paid on SAF amount. Now I have left the job at 53 years age. How I will get that SAF amount. Please advise.
Regards,
Yogendra Kumar Gupta
Yogendra, Pls approach your payroll department and check where the SAF is invested along with SAF number e.g. LIC or ICICI life insurance etc. Then you can approach them and withdraw as per superannuation rules
Sir, I joined Cadila Pharmaceutical Ltd on 09th Feb 2008 and resigned on 1st February 2021, My PF balance is 640,000 in trust and super anuation is 430,000 with LIC of India. What will be best option for further plan?
Hello Manoj, since you are already aware that your Super annuation is with LIC, you can approach them and withdraw as per superannuation rules + take pension plan for balance beyond the eligible lumpsum withdrawals.
WHICH BANK AUTHORIZED IN MHARASHTRA GET PENSION. (SUPERANNUATION PENSION).
MY HO AT AHMADABAD & I WAS WORKING AT MUMBAI BRANCH
Sir,
I am working in a prestigious company since last 09 years, still in this company. But I want withdraw from superannuation fund. Is it possible?
You cannot withdraw superannuation when you are there with the company. Pls see the T&C for withdrawals. This article has details on who can withdraw. https://myinvestmentideas.com/2020/10/how-to-withdraw-superannuation-fund-in-india/
Hello :
Is it possible to withdraw the accumulated fund in SuperAnnuation, once somebody moves out of the India and is no more employed with Indian employer.
If yes, what is the slab rate applicable?
Prakash, pls check this article for superannuation withdrawal rules. https://myinvestmentideas.com/2020/10/how-to-withdraw-superannuation-fund-in-india/
Is it possible to transfer the Superannuation amount to a NPS account ? Tracking a Superannuation is difficult after leaving a job, but NPS is available online.
Yes, it is very much possible. I did it personally for self. Pls approach your NPS provider and ask the process to move Superannuation to NPS and they can provide a detailed note on how to do it. It is little tedious, but is worth doing it as NPS is online and you can always track it which is in your control.
Hi,
I had completed 9 years in my organization & here the superannuation is linked with LIC of India. Can I withdraw the total Superannuation amount.
Regards,
M. Will
Hello Max, There are few T&C to withdraw your Superannuation. Check this article which has all these guidelines. https://myinvestmentideas.com/2020/10/how-to-withdraw-superannuation-fund-in-india/
Hi,
I am 57+ years I was laid off on 30th. Oct 2020. I will complete 58 years on July 2021.
In case I withdraw my LIC superannuation fund of Rs.15 lacs in April 2021 i.e in FY 2021-22 . what will be my tax liability on superannuation fund . Weather entire 15 lacs will be treated as my income or only 10 lacs,
Whether I will be eligible for tax exemption under section section 6 ( house rent ) , 80C and 80CCD (1B) for the year 2021-22 .
Hello Navneet, Superannuation maturity amount is completely taxable. If you receive such amount you need to pay income tax as per income tax slab applicable to you. The best way to avoid is to take annuity plan from same LIC. The pension payable every year is treated as income and you need to pay income tax on this. e.g. Rs 15 L annuity can give you Rs 1 Lakh pension per annum (approx and would vary with option you might choose). You may need to pay income tax based on your total taxable income. Regd House rent (HRA) is only for salaried individuals. You can claim HRA to the extent it is indicated in your form-16 for 20-21. For FY21-22, you would not be eligible to claim HRA. However, the exemptions u/s 80c and 80CCD 1b are available for all individuals (salaried + others)
Sir
My Company went into closure on Oct 2017. My superannuation fund is still lying with HDFC life assurance. On contacting them they say now no trustee or signatory is liable to take care of and not replying over mails and phones. In this context what should I do ?
Hello Rupa, It is the duty of the HDFC Life Assurance to serve customers of Superannuation fund where their company has invested. Pls raise complaint against such insurance company with the details at IRDA Website. Pls keep all documentation of communication ready before raise the request. https://igms.irda.gov.in/loginph.aspx
Hi , I have done withdrawal of Supperannuation fund upon resignation from the company , I have recieved 1/3 of the Sum from the company for Supperannuation fund withdrawal and 2/3 is invested in Annuity , May i know what are taxable implications for the withdrawal? If i have to declare 1/3 of the amount recieved in ITR wgich section under Income from Other sources i should use to declare the amount?
Thanks and Regards,
Gitesh
Hello Gitesh, As indicated in the article, at the time of change of job (or even during resignation), any amount withdrawn is taxable amd should be shown under head ‘income form other sources’ and pay necessary tax
Thanks for reply , Can u indicate which section of ITR i have to show this amount under Income from other sources ? My resident status is Non-resident and i am filling ITR-2
Hello Gitesh, There is no seperate section for showing Superannuation in ITR. You can go to ITR –> Income from other sources –> 1) Gross income chargeable at normal rates –> 1) e) – Any other income –> Under this add a row for Superannuation and indicate this amount. The income tax would be charged at normal rates and not specific rates.
Sir,i retired July 31st,2020.At that time my super annuation fund was 10lacks thirty thousand rupees.LIC fixed 4700 rupees pention.please advise.
Hello Satyanarayana, Pension amount would depend on pension scheme chosen by you on retirement. Pls reach out to LIC customer care if you have not opted on your own to provide options (not sure whether you can change this now)
I am employed with an IT company. It provides super annuation as a part of my CTC package. I have not opted for it, is it worth to take it. I am aged 38 now. Assume i am going to be with company for another 1-2 years. I already spent 5 years with company. There was a statement in the internal policy stating that if total contribution is less than 1 year, i can remove the funds during resignation – will it be tax free or will i taxed if i remove it within 1 year due to resignation? Also there is no mention of how much percentage will be contributed by company – why do they hide that ?
They are saying that if i resign i should transfer it any other pension fund in the new company ? Is this pension fund really worth considering my age or should i opt for any private pension funds ?
Hello GK, I would not be able to comment about company internal policy guidelines.
Regd taxation of Superannuation amount. there was no maximum limit specified for such contribution made by the employer for an employee till FY 2010-20.
The budget 2020 presented on the 1st of February 2020 announced a combined upper limit of Rs 7.5 lakh in respect of employer’s contribution to NPS, RPF, Superannuation fund in a year. That means any contribution made by the employer in excess of Rs 7.5 lakh will be taxable as perquisites in the hand of the employee. Consequently, the interest, dividend or any other income accumulated on such funds or amount in the financial year shall also be treated as perquisite to the extent it relates to the employer’s contribution, which is added in his total income. Source cleartax
Post resignation, your company cannot tell what you need to do. There are certain guidelines about how much you can withdraw and how much it would retain in your superannuation fund. I have drafted an article which would be posted tomorrow on how to withdraw your superannuation in India.
Finally, is this worth considering? My personal opinion, NO. I have detailed about this in FAQs which is scheduled to be posted next week. With so much complexity in this scheme, one should not opt this (provided an employee has an option)
If a company opts for superannuation fund, all employees accross the organisation have to covered or employees have a choice of opting for the scheme.
Pls guide
Hello Preeti, Generally it is company policy where they would provide superannuation fund to all eligible employees
How much I can get from Superannuation fund left with Company/LIC after getting 1/3rd of the total amount. Supposed I have leftover Rs100 when I have retired. I will take Rs.25, the leftover Rs.75 how much tentative pension I can get every month?
I will be oblige if you can share this information
Hello Subrata, The pension amount would depend on insurance company annuity rate + your age + the type of annuity option you might choose, hence it is not plain answer. As a sample example, try this LIC Jeevan Akshay Annuity calculator based on various options. This is just an example and actual annuity would defer in your case. https://licindia.in/Home/LIc-s-e-Services-(1)/JeevanAkshay-index
Thanks a lot for this information. I am sorry for delayed response from my side.
Sir, worked in an MNC for 12 years and resigned in May 2019. After resigning applied for superannuation benefits and from Last year August, monthly i was getting pension from LIC. I am not sure from last 2 months (August 2020 and September 2020) pension is not getting credited to my bank account.
Please let me know to whom i need to contact.
Pavan, Pls approach LIC customer support with details of your superannuation fund.
My company has super fund with LIC and i’m associated with the fund from 2014. Is it possible to know the interest rate ? how much my policy will be worth in future.
Not 100%. But you consider how much a insurance company would pay to you. It could be 5% to 6% max.
Hi,
If I withdraw the entire amount accumulated in my superannuation fund, while changing company, will I have to pay tax on the interest amount as well?
If I withdraw the superannuation amount this year, can I invest in a pension fund in the next financial year? If so, will I get the tax exemption this year?
Hi Sir,
I just joined a new company which has superannuation fund (SAF) as part of CTC which comes under flexible benefits plan(FBP). And they said it is one time activity that means I can opt for SAF only at the time of joining.
My previous employer does not have this so I was not aware and I opted for this. I really do not have any idea whether it is really beneficial?
My question is for an individual like me who is 30 years old and need money at this time not at retirement is it really worth to opt for this?
Also when can i take this money out
Thanks in advance
Hello Rashmi, As per my personal opinion and experience Superannuation has several drawbacks compared to other retirement options like NPS / EPF etc., Request you to go thru the article to understand Superannuation. This option would be helpful to you only to save tax. On other hand your take home salary would be lower (as superannuation would get deducted). The control of superannuation account is with employer and not employee. Where as for NPS or EPF or PPF it is in the control of employee (in EPF one can transfer to new employer if change in job which is within control). Many employees who opted for Superannuation had no clue now on how to claim / track after they switch to new jobs. This is major drawback in opting superannuation. Think before opting for such options.
Sir ,
I am 61 years old and still working as a regular employee of my company . I am yet to retire. My company is still contributing to the LIC super annuation scheme for me .
My query is that , for a GIVEN corpus amount , does a person who a starts receiving pension at the age of , say 62years , get more pension compared to a person who starts receiving pension at 60 years ? My query is based on the fact that the person who retires late will get pension for for less number of years assuming both live till same age , where as, the corpus amount is same in both cases .
Could you please give a detailed clarification ?
Thanks
Sivaraman
Hello Sivaramanji, Pension amount would depend on corpus accumulated, start date of the pension expected and expected tenure for which you would get pension (in case opted for specific number of years). In your case, corpus would continue to accumulate till you opt for pension amount. e.g. Say your company is still contributing to superannuation till your 63 years of age and then you retire(just example). Pension amount would be based on the accumulated amount (minus any withdrawal you are doing it). Hence in your case, it would be higher compared to a regular retired individual who would have opted for this during retirement at 60 years of age. You can approach your payroll department and get the accumulated superannuation amount. You can get the LIC superannuation manager details (who is managing it) and check with him how much pension you might expect in today’s scenario based on your accumulated amount and various options of tenure of pension.
Dear Suresh ,
Thank you for the clarification .
Sivaraman
Hi,
I am 34 years old and i have resigned from my company, my last working day was 15 July 2020. As of now i am jobless, I am not sure that i am eligible for superannuation or not?
I do not have knowledge about the superannuation, can you please brief me about the superannuation in below points :-
1) Please confirm that superannuation contribute by the Employer (Company) or employee?
2) Is it mandatory to contribute towards superannuation just like as a PF?
3) How do i get to know that my company shares the funds towards superannuation on my behalf
4) If my company shares the fund towards superannuation, then how do i withdraw this amount after the resignation from company (I already resigned and my last working day was 15 July 2020)
OR It can only withdraw after completing the age of 60 Years
Please confirm the above points. Looking forward to hearing from you.
I greatly appreciate your help!
Thanks & regards,
Sourabh
Hello Sourabh, As part of retiral benefits, some of the companies offer superannuation benefit to employees which is contributed only by employer. Pls check whether it is part of your CTC break-up, if yes, pls approach your company payroll department for the superannuation. since you have resigned, if superannuation is applicable, you can withdraw only partial amount now and take immediate / defer annuity for the balance amount. My advice is first check your CTC break-up + if it has superannuation, you can approach your company payroll department. I can assist you further once you close these two points.
I am 59 yrs old and no job or working .can i take my superannuation fund .my past companies has been closed where should i contact.
BDDL sahibabad ghaziabad.UP
JCT Electronics mohali chandigarh.
Since the companies where you have earlier worked are closed now, you need to identify the insurance company where the superannuation is maintained and then you can claim it. It is little difficult task, but you need to identify. You need to check any of your past records under which insurance company such superannuation is invested. Without that it is difficult to trace it
after resigned my job , say about i am having 10 lakhs accumulated in my superannuation fund and if I choose entire amount as annuity then how much pension i will get monthly and how many years it will be paid .
in case of any eventuality will the nominee will get the pension
I am 56 and recently took voluntary retirement. I am not working for any company now. Can I take pension product (from superannuation contribution) now or should I need to wait till 60 years?
Shiva, You don’t need to wait for 60 years. You can take annuity option now itself. Pls approach your employer and close necessary documentation. Howver taking immediately annuity would provide you lower annuity compared to annuity post 60 years of age.
after retirement , say about i am having 15laks accumulated in my superannuation fund and if I choose entire amount as annunity then how much pension i will get monthly and how many years it will be paid .
in case of any eventuality will the nominee will get the pension
My Organization has asked me to resign due to loss of business (covid issue) after 2 year of service.
6000 is the amount of Superannuation as per my CTC structure. After joining the Org, I was informed that Superannuation will be given to me only I I complete 3 years in the Org.
But in current situation, when I’ve been asked to resign, I feel very unfair on their part, that no amount of Superannuation will be paid to me.
Can I make it a legal case to get my superannuation?
Hello Mahesh, if the T&C for superannuation is to wait for 3 years, there is nothing can be done. Pls check your appointment letter which would contain this superannuation clause what you are referring
Once retired if we dont with draw super annuation will the service provider provide interest on it till we withdraw the Super annuation?
Can this be clarified.
Krishna, It would continue to earn interest. However one need to either withdraw as per superannuation rule or take pension product to get benefited.
Our company has enrolled us for superannuation scheme and did some paper work ,however they never given us any recipts or ststemnets claiming that this scheme is an additinal benefits and payment is being done by company
they gave us statements as printout some time but no policy number appears on these statements and name of LIC does not appear
now some of our collegues have retired and we now find from frendly sources in lic that the contributions are irregular fr some members tey have contributedregullarly and for sme mebers they have skipped manyinstallments
now the mangemntshave changed and they are claiming to be helpless
LIC should hve informed us about non contribution we could have taken proper action at appropriate time only
Hi can I freeze my superannuation
Hi;
I am about to start superannuation pension from July 2020.My employer has asked for the option for pension as –
(i) 15 years certain or for life thereafter without the option for return of capital amount after death to nominee
O R
(ii) Life (ceasing at death) with option for return of capital along with Group Pension Terminal Bonus, if any, that may be declared by Life Insurance Corporation of India
Request to kindly have the inputs for opting with merits pl.
Hi Suresh,
Really great article. It has all required information. Thanks a lot.
I have resigned from the company & not working anywhere currently. The employer is requesting to convert this into pension scheme. Should I go ahead or leave till the age of 58. ( My current age is 49 )
Can I still continue to leave it in the insurance company where my employee has the account?
Sir,
I have resigned and relive from private company after 16yrs of job. In new company there was no superannuation scheme. How can I withdraw my full amount of superannuation.
Pls approach your payroll department of previous company who can help you to provide steps to withdraw it.
Hi,
I was working in a company in chennai for more than 13 years. But now that the company is under liquidation and we were asked to leave the company just before liquidation was announced. But also at the same time we have lot of pending salaries from the company. Also while leaving the company, technically we have not given any resignation letter or the termination letter.
Now how to I get back my superannuation funds
Please guide me through as this will help our family starving from the non receipt of the salaries.
Also to be noted here that as such I am 63 years and not working anywhere.
Please guide me through
Hello, Your company superannuation fund should have been maintained externally with an insurance company (preferably like LIC or ICICI Prudential). You should reach out to your company executives and find out your super annuation account no and then you can plan for withdrawal of superannuation. By any any chance you can reach out to them now ?
Yes exactly. since its under liquidation, nobody owns responsibilities. Bu I have the LIC super annuation account no. But when I want to check it online, it asks for LIC id. Dont know where to get it from. How to get it?
Hello Sundararajan, Here is an article (not ours) where it is explained step by step on how to access LIC superannuation pension fund plan details. https://www.shipindia.com/upload/employeecorner/LIC_USER_ID-1d2bce.pdf. Pls let me know whether this is useful.
I have resigned from my company after serving for 20 years. My age is 45 years. I want to withdraw 100% of my superannuation fund. Please guide the process to withdraw of 100% of the amount.
Hello Sanjee, Since you have resigned and not working in any other company now, you can approach your last employer and withdraw superannuation fund
I have resigned form my company & not going to continue my job any where. My superannuation account is with my company Vodafone idea Ltd, My query is Still didn’t deposited Interest amount of FY 19 -20 in last statement . Did i withdraw amount before interest credited or i have to wait till interest update . But how can i able to know when will my interest update
Can i get interest amount after ward ^ what extra procedure for withdrawal i have to do. as my SA details are not with me & my last company is also not sharing details with me. Pl help
I would suggest you wait till you get interest payment. There could be delay due to covid-19 and these issues should sort this out in next 1-2 months. Pls approach your super annuation company (where your company has deposited) to know exact status
Hi Suresh, Well written & Interesting article. Please let me know the authority / body an employee can approach for redressal of grievance. i.e who is the authority / statutory body to be approached for superannuation fund
Suman, This is managed by companies with any of the insurance companies like ICICI Pru life or LIC India etc., You should approach the grievance cell of that respective insurance company who is managing the superannuation fund
I have 10 Lakhs in Superannuation annuity in LIC, how much should I get monthly.
Kaushal, You may reach out to LIC on this.
i will be retired in next 6 months.i have total 15 lac superannuation fund. if i withdraw 1/3, then how much pension i will get on balance 10 lac on various option of scheme of LIC
i am 53 years and not having a job since last one year. I do not want to withdraw my superannuation. Can i ask for annuity now w/o waiting for being 60 years as i need regular cashflow?
I worked in in private 4star hotel suparannuation scheme started 2017 I resigned 2020 I have completed exact 3years
How can with draw policy amount sir
Sir, I had recently completed a pension policy from ICICI prudential.The total fund value was 3 lakhs out of which I encashed 1/3. On the balance of Rs 2 lakhs, I was told that I will receive an annuity of Rs.14000/- which will be taxable . This works out to 6.6% of the fund capital of Rs 2 Lakhs . This kind of return can be achieved though other means also with additional flexibility to spend the capital in emergencies. So I am unable to understand what special benefit do these pension/superannuation funds offer?
Regards
Roy
It is beneficial for government and not for the person as government gets the easy money without giving good interest to person. Based on this only LIC like government insurance company is thriving. People should be allowed to withdraw the full amount which they can put in other investment which can give at least decent return. Here in superannuation they are giving just 6.7% interest and over that you have to pay taxes on that also.
I am now at 58 years and going to retire in next 2 years, at present I have Rs. 1500000/(fifteen lac) on account of superannuation, how much per month pension will get from this policy?
Hi Suresh,
Can you please clarify on number of years of service. It is from the date superannuation is opted or it is the total number of years of service.
If an employee working for IT Company for 10 years and now CTC included superannuation as one of the component. is it worth or risk ?
My question : If employee opt for superannuation on 25th Nov 2019 and leave company , what happens to the amount . How number of years of service is calculated from 25th Nov 2019 or it does not matter when superannuation started , but serving for this company for 10 years , so 100% amount is paid / allowed to purchase another policy.
Can you please clarify this.
Thanks
What is the interest rate paid on this contribution? Is the Superannuation scheme better than NPS. Please guide.
How pension amount is calculated on superannuation amount.
For ex what will be the pension amount for superannuation amount of 20 lac
S.P. Singh
why the content is exactly same with cleartax.in
Hello Venkayam, Just because I have written the article, Superannuation rules and regulations won’t change. These are standard guidelines. Our website is putting together all these rules, regulations and method of computations. You would see similar details on other websites, however they would cover across several articles / single article, we did this in 1 single article.
How pension amount is calculated on superannuation amount.
For ex what will be the pension amount for superannuation amount of 12 lac
Nitin
Taking that 4 lakh is withdrawn at the time of retirement(1/3 of 12 L) , the remaining 8 lakh will give you around 39800 (taking 6.8% yearly interest) . The better option is to withdraw the max amount your company is allowing you to withdraw as 6.8% yearly interest is very low and on that you have to pay tax on interest amount as well so it will come less than 6.8%. These policies were made to benefit government only and nothing has to do with welfare of people.
Hello
Resigned from MNC at the age of 55 (Sep-2018) after working in MNC for 16 years, I have few queries, I hope you can clarify the same.
1. Am I eligible to withdraw entire amount of my Superannuation ?
2.As I am now 56 years old will I be considered as I have attained retirement age and hence only eligible for 1/3 of the total amount.
3. Is there any formula on how the monthly pension calculated.
4. From when and who will disburse the pension? Currently my company is working with ICICIDirect for Superannuation funds.
IN the annuity plan, which option will be the best one.
Payable for life
Payable for life guaranteed for 5 years or 10 years or 15 years
Payable for life with a return of capital
Payable jointly on the life of husband and wife
i have worked with a company for 8 years 10 months, but as per my employment letter superannuation will be applicable only when 10 years are completed.
Is there any law which can help me to have this fund.
Hello Pramod, In case of gratuity one is eligible to get it after 5 years for sure. However for superannuation, this would depend on employer and the agreement with the employee
If I resigned job after serving with the organisation for 3 years and 3 months period, will I get benefit of 100% contribution from employer?
Hi Selva, I am updating this comment which I responded 5 minutes back. As indicated in point no.3 of the article, since you served over 3 years, you are eligible to get 100% of superannuation + interest there on. , provided your employer is providing this superannuation benefit. Read full article on how you can transfer to new employer / withdraw superannuation
Thanks Suresh for the clarification provided. keep it up.
Hi Mr. Suresh
Very informative article. I have query-
My husband retired from service on 30 th June after working for 25 years with the comapny. His company had superannuation with LIC. He had finished all paper work regarding superannuation before 27 th June. When will he receive the 1/3 amount and when will the monthly pension start.
Hello James, He need to reach out to employer for the details when this would be paid out
Hi Suresh
What is the use of posting our queries when you are not replying anyone.
Deepak, While we would try to answer queries raised by readers, It is not possible to answer all queries. What is your query on this topic?
Mr. Suresh
Will I be able to get the benefits from the amount accumulated so far, if I resign from the organization.
I heard that the employees contribution will be only given to the employee if he/she resigns. is it true?
I have 28 lakhs accumulated in Superannuation fund with LIC.
I propose to withdraw 1/3 on retirement by Sep 2020.
Then what amount of pension I will get on following options.
1.Payable for life
2.Payable for life guaranteed for 10 years.
3.Payable for life with a return of capital
4.Payable jointly on the life of husband and wife.
5.If I withdraw the remaining 2/3 and invest will it earn more than the tax amount plus the pension that we would get.
6. What is IT% if I withdraw balance 2/3 also at time of retirement or after 2 years of retirement.
Great article and two things i would like to know.
1.During redemption during retirement can one withdraw the whole amount without annuity.
If you can provide me a download link it would be good to send to my like minded friends and also since internet sometimes link goes off and we have to again log in to read it.
Also we can then read it offline when we have time and also show it to our friends.
Appreciate your looking into the same.
Great Article sir. My Organization is associated with LIC. But have clarificcation on below:
1. Came to know from LIC Rep that only 1/3rd can be withdrawn and remaining should be compulsorily put on Annuity scheme. (not told option of complete withdrawal)
2. Will employer contribute equal amount of corpus at the time of retirement? (For ex if my accumulated corpus is 5 Lak and at the time of separation will employer contribute something on this?
Request guidance.